Norilsk Nickel may move copper production plant to China. Does Russia need it?

Nornickel's plans to move copper plant production to China have raised questions both in the government and among experts.

Photo: pixabay.com by windhorsetourchina, https://creativecommons.org/public-domain/pdm/

In April, Nornickel (Norilsk Nickel) announced plans to "create a joint venture with international partners and transfer part of the copper plant's capacities from Norilsk to China." The copper plant will continue to operate "modern copper concentrate preparation facilities and industrial 3D printers."

"We are transferring our environmental problems, settlement problems, problems of market access and customization of our goods for the consumer market to where they can be solved most effectively — to China," Vladimir Potanin, co-owner of PJSC MMC Norilsk Nickel said in an interview with Interfax.

Most likely, the decision is based on the intention of the company to circumvent Western sanctions.

Potanin intends to implement his plan "beyond the horizon of 2027." Everyone who wants to continue working for the company will be employed. Nornickel "will be able to increase revenue by 20 percent compared to the situation before the beginning of 2022."

However, experts at the institutes of the Siberian Branch of the Russian Academy of Sciences spoke out against the transfer of copper production to China. The decision looks ambiguous against the backdrop of the course towards the formation of technological sovereignty. Russia is moving an important strategic enterprise to China, and may thus lose it if something happens.

Academician Valery Kryukov, Director of the Novosibirsk Institute of Economics and Organization of Industrial Production, believes that the closure of the copper plant may lead to dangerous consequences.

"I can tell you with a high degree of certainty that after we supply copper concentrate to China we will begin to import Chinese electrical engineering products. Russia may thus lose its own mechanical engineering, high-tech jobs will vanish," Kryukov said.

The story with the copper plant may set a precedent for the transfer of other enterprises in the hands of private owners abroad.

The taxes that the Russian budget currently receives from this industry will be relocated to China as well. It also remains unclear how Nornickel is going to employ smelters, etc.

The project that Norilsk Nickel is going to implement may bing up the need to check how the company spent the budget funds to reduce sulfur emissions by 75 percent by 2023.

According to Nezygar Telegram channel, 120 billion rubles were to be allocated for environmental measures, primarily for treatment facilities. Most of the funds were obtained from state budgets. It goes about 300-400 billion rubles.

Norilsk Nickel may be nationalized

If copper production is transferred to China, one will need to implement a compensation mechanism that will reimburse the costs of the state taking into account interest and penalties for misappropriations.

"As a result, one may eventually revise the results of Norilsk Nickel privatization based on the precedents of the Office of the Prosecutor Genera of the last two years," authors of Nezygar Telegram channel believe.

The copper plant started making first products in December 1949. The production was then expanded due to the introduction of new workshops. Norilsk Nickel was privatized in 1993 based on presidential decree No. 1017.

The copper plant produces cathode copper and technical sulfur. The plant also produces semi-finished products intended for further use in other stages: sulfuric acid, nickel sulfate, mother liquor, copper sludge and nickel slag. In addition, the metallurgical shop for the production of precious metal concentrates processes sludge with the subsequent production of concentrates of precious metals, metallic silver, selenium and tellurium.